Thursday, February 14, 2013Last Update: 9:54 AM PT

Receiver Claims AmEx Got $5 Million in Scam

MIAMI (CN) - American Express made more than $5 million from a $14 million vacation scam that charged Spanish-speakers for "prizes" they never got, a court-appointed receiver claims in court. Jonathan Perlman, the receiver for VGC Corporation of America, sued American Express Centurion Bank Corp., American Express Travel Related Services Co., American Express Bank, and American Express Co. in Federal Court, to recover assets diverted from VGC. VGC formerly did business under several names, including All Dreams Vacations, All Dreams Travel, and All Dream Tours. They stopped operating after the FTC and Florida sued VGC, All Dreams, and American Express in 2011, alleging violations of the FTC Act and the Florida Deceptive and Unfair Trade Practices Act. "Since at least 2008, and through 2011, prior to the appointment of the receiver, the individual defendants, using the receivership entities, have been engaged in deceptive and abusive marketing practices that trick consumers into believing they won a vacation prize, and further deceiving them into paying money to claim this prize that few consumers ever receive," the complaint states. "Through the use of television and radio advertisements on Spanish-language stations throughout the country, the individual defendants promised a fabulous vacation package as a prize to certain 'lucky' callers who were declared 'winners.' Consumers were then told they must immediately pay a fee ranging from $200-$400, in order to claim their prize. Prior to intervention by the FTC in May 2011, the individual defendants' wrongful acts in violation of the FTC Act and the Florida Deceptive and Unfair Trade Practices Act has caused injuries to consumers in excess of $12.5 million dollars." The Southern District of Florida appointed Perlman receiver for the VGC companies in May 2011, to investigate, protect the remaining assets, and sue on behalf of the companies and of injured consumers and creditors. The court enjoined the VGC entities and American Express from further deceptive marketing and sale of vacation packages, and stopped the VGC entities from operating. Perlman claims that between 2008 and 2011, American Express, through the VGC companies, used catchy ads on TV and radio stations to promote contests for vacations "worth thousands of dollars." Callers were immediately declared "winners" and asked to pay hundreds of dollars to claim their prizes, according to the complaint. A sample question suckers had to answer to win was the screen name of Mario Moreno, according to the complaint, which cites an ad translated from Spanish. The late Mario Moreno, known as Cantinflas, is the best-known and most beloved comedian in Latin America. "Since at least January 2008, the individual defendants deceptively marketed a prize promotion involving a vacation package to consumers, most of whom are Spanish-speaking," the complaint states. "Advertisement was nationwide through purported contests on Spanish language television and radio stations, offering a vacation package as a prize to certain callers who correctly guessed the answer to a simple trivia question. "Consumers who called the number provided were uniformly told they won a vacation package, consisting of one or more trips to popular destinations. Consumers were then informed that they had to immediately pay a tax or an administrative fee, generally ranging from $200-$400, in order to receive their promised vacation package. "Consumers who paid the taxes or administrative fees did not receive their promised vacation packages." Perlman claims the defendants' representatives told all the callers they had given "the correct answer" and had "won" vacation packages. "In a script obtained from a former employee, employees were directed to tell consumers that, '[t]he answer is correct!!!,' this is the 'winning call,' and they have 'won,'" according to the complaint. "The script further advised employees to tell consumers that they were only one of five winners out of 800 callers from twenty states, and as such, they had won trips to additional destinations. "The script further instructed employees to '[t]ransmit emotion, take advantage of the emotion that the client is feeling, use it to your favor!!!' and to tell consumers, 'Congratulations to you and your family ... That's great, right? Are you happy? ... Wonderful!!! Perfect!!!'" (Brackets in complaint.) After the suckers were told they had won trips worth thousands of dollars, they paid up to $400 in fees to claim their prize, according to the complaint. Then, the receiver says, most of the "winners" were told they did not qualify for the prize after all. "In many instances, consumers who called to book their vacations were told they were not eligible to redeem their prize because they did not meet previously undisclosed conditions, limitations, and restrictions, including age, income or marital-status requirements, or required attendance at a timeshare presentation," the complaint states. "In many other instances, consumers were told their promised vacations were no longer available or they had to make additional payments in order to redeem their prize. "Other consumers were unable to claim their prize because they could not reach VGC or All Dreams at all." Perlman says the companies refused to return the customers' money, and told them they had a "no refund" policy. "The individual defendants, through VGC and All Dreams, ultimately obtained in excess of $14 million in consumer funds much of which was misappropriated for their personal use, including extravagant spending on their American Express credit cards," the complaint adds. Perlman claims American Express has received more than $5 million from the VGC companies since 2008. He seeks to recover the money transferred and to stop the fraudulent transfers. He is represented by Carlos Sardi with Genovese Joblove & Battista.